There are a lot of forex traders who have heard of revenge trading, but do not fully understand what this is. Revenge forex trading is a very negative type of forex trading that is completely based on your trading emotions. It is important that you know how you fall into forex revenge trading. You should also consider what the issues are that you can find with this forex trading and the ways that you can avoid forex revenge trading.
What is Forex Revenge Trading?
Before you can consider what the issues are and how to avoid revenge trading you need to know what this is. Revenge trading is a negative trading that comes from emotions on the market which follows the losses on the market. As the name suggests this trading is driven by the need to get revenge on the market for the losses that you have made. There are a number of problems that come with the basis of this trading.
The first issue is that you are blindly blaming the market for the losses that you have made. This will not help your trading because you are not actually finding out what went wrong. This means that you are going to continue losing money on the market because you cannot determine what the root causes of your losses are.
The Risks of Revenge Trading
There are a number of risks that come with revenge trading and you have to consider this. When you complete revenge trading you are going to be looking to make as much as possible on the market. This will generally translate into you using too much risk on the market. When this happens you are going to be using a lot of leverage or more of your trading account than you should. This will cause a lot of issues if the trade turns against you because you are going to lose more than you actually make.
Another risk of revenge trading is that you are not going to be basing your trading on any analysis that you complete. As you are running on emotions when you trade on in this manner you are not going to wait for the signals that you should be. You will be trading on the first movement that you see on the market. You will not consider whether or not you are going to be making money with this trade.
How to Avoid Revenge Trading
There are a number of ways that you can avoid revenge trading. This type of trading can be avoided by having a routine that you go through when faced with a loss on the market. There are a lot of traders who take some time from the market when they are faced with a heavy loss. This is one of the best things that you can do because you are able to calm down from the loss you have made and rationally think about what has happened. The second point you should consider is accepting that you are going to make a loss at some point on the market.